As Greece increasingly turns to natural gas to cut its reliance on coal, one company has set its sights on leading the evolution.
Mytilineos Holdings SA aims to leapfrog state incumbent Depa SA to become the leader in Greece’s gas market by the end of 2020. The Athens-based company, which has imported U.S. liquefied natural gas to Greece, expects a new power plant and sales to third parties to help it meet that goal.
“Natural gas is the most important pillar of Mytilineos’ strategy in the energy sector,” Panayotis Kanellopoulos, the managing director of the company’s gas subsidiary MNG Trading, said in an interview in Athens. “Greece is a small market, but has growth prospects.”
Greece is isolated from the main European gas grid, getting most of its supplies through a pipeline from Russia that crosses Bulgaria as well as some LNG, mainly from Algeria under a contract with Depa that expires in 2021. With the power sector accounting for two-thirds of consumption, usage should increase thanks to low prices and the rising cost of emissions permits that are making coal-fired plants less profitable, Kanellopoulos said.
Greece is expanding its consumption of gas and renewables in an effort to pare back reliance on coal, which now provides a third of the nation’s electricity and as recently as a decade ago contributed 55%, according to data compiled by BloombergNEF. Gas-fired plants generated almost 30% of power in 2017, up more than 10 percentage points in the past three years, the most recent data BNEF has.
Mytilineos is the largest of a handful of independent electricity producers that are cutting into the dominance of Public Power Corp., which generates almost two-thirds of Greece’s electricity. The government debt-bailout deal required PPC to divest 40% of its most polluting coal plants, which use a soft, brown form of coal known as lignite, according to BNEF.
Mytilineos currently has a gas market share of 32% compared with 45% for Depa, Greece’s state-run supplier that is slated for privatization, and has a “competitive portfolio,” Kanellopoulos said. This year will be the first where the company will sell “significant amounts” of gas to third-party customers with revenue from such sales forecast to rise to 100 million euros ($111 million) by the end of 2019 from less than 20 million euros in 2018, he said.
Mytilineos announced in 2018 an investment of as much as 300 million euros to build a new gas-fired power station in Greece with a total capacity of 750 megawatts. Gas is a bridge fuel in the move toward higher use of renewable energy sources that will increase rapidly once there is improved technology for large-scale power storage units, he said.
Greece is also well located to export gas to neighboring countries and Mytilineos’ aim is to have a role in the wider region, he said.
Greece’s gas transmission system already transports gas from the borders with Bulgaria and Turkey while gas also enters the country via the Revithoussa LNG terminal near Athens. Mytilineos was the first private company in Greece to import American LNG via the terminal with a shipment of 170,000 cubic meters in February.
Bulgaria and Greece started the construction May 22 of a natural gas link designed to transfer the fuel from the Aegean Sea and the Middle East to the Balkans in a bid to reduce the region’s dependence on supplies from Russia. Bulgaria will receive its first LNG through the Greek terminal by the end of the third quarter.
The Trans Adriatic pipeline, which will carry Azeri gas from the Greek-Turkish border to Europe, is set to start operations in 2020. Another entry point, for both Greece and markets elsewhere in south-east Europe, will be the planned offshore floating LNG storage and regasification unit near the northern Greek port of Alexandroupolis. Commercial operations are planned for 2021.